Over the past ten years of turmoil and upheaval, Libya’s political economy has been fundamentally altered. Despite the role of political and business elites in continuously setting ever worse examples of malpractice, it is Libya’s militia class which have truly become the biggest beneficiaries of the state of Libya’s dissolution.
Since 2012, militias have undergone a process of “mafiaisation”, savvily leveraging the politicians’ need for protection, or employing them to neutralise opponents, in order to muscle in on their corrupt schemes and gain official status. Mafiaisation means that Libya’s armed groups have quickly evolved from opportunistic young-men to petty thugs and criminals, and today are largely white collar criminals who retain the capacity for extreme street violence.
This has had a definitive impact on many core areas of European interests, from protecting energy supplies to migration and regular economic activities. If Europe is to find a stable and constructive way of managing the relationship with, and normalising activity in, the heart of the Mediterranean it is going to have to better understand how Libya has changed and how to temper these changes.
A catalyst for Libya’s mafiaisation has been the de facto division of the country since 2014 under two administrations, both in desperate need of might to make right their lack of legal or political legitimacy. The trailblazer for this new nexus was the then renegade General Khalifa Haftar who made a bargain with key tribes in eastern Libya to back his war for supremacy in Cyrenaica.
Whilst it was marketed as a war on terror, this deal provided tribal forces the tools of war to displace wealthier urbanites in Benghazi and seize their land and assets, and then eventually dominate the public sphere. The last part was key, as despite fighting a violent revolution to rid themselves of Muammar Gaddafi in 2011, his rentier style governance system remained in place. So, in Libya true power and wealth comes from access to state coffers and the resultant ability to build patronage networks by providing government positions for others.
In western Libya, a similar system of violent co-option of the state developed in a slightly different way. While groups from the cities of Zintan and Misrata, two powerhouses of the 2011 revolution, each attempted their own version of Haftar’s state capture, power was simply too diffuse in western Libya for any one group to predominate. So instead, armed groups grew in power and inertia through rent-seeking if any key state
assets or valuable businesses were situated in their local area, if not, then petty crime often sufficed. This was exacerbated by local elites who, like Central Bank Governor Sadiq el-Kabir, traded protection for an inside track for militias to make money through the banking sector or international credit systems.
In other cases, best seen with the then Presidency Council under Fayez el-Serraj, key state assets such as the Libyan Post and Telecommunications Company were handed out to friends, instigating a system of trickle down corruption. As is ever the case, eventually money was no longer enough and the armed groups looked for wealth and power.
Wealth was essential to reshape economies and ecosystems, also to ensure the centrality of the armed groups while power, through wealth but also thanks to the official rank, allowed them to control key components of the interior and defence ministries, providing to the armed groups a platform to forge international connections. Ironically, following Haftar’s failed putsch in 2019-2020, the patterns of power in east and west Libya were reversed.
Western Libya continued a trend of centralisation into official institutions that began pre-2019 with a consolidation of power over the capital by a group of local militias dubbed the ‘Tripoli Cartel.’ Meanwhile in eastern Libya, despite the lingering presence of the Libyan Arab Armed Forces (LAAF), actual control has often splintered to fiefdoms, with the LAAF central command retaining very loose operational oversight or command and control capacity.
Given Libya’s riches and internationalised conflict, the fact that international actors have often aggravated Libya’s mafiaisation may be unsurprising, although the roles played by European countries in particular should give cause for consternation and reflection.
The most controversial example is France’s active sponsorship of Haftar’s LAAF. Here, a policy nominally about counter-terror cooperation morphed into political patronage, military assistance to facilitate these political goals, and active diplomatic shielding and protection.
This backing and protection provided Haftar absolute impunity and shielded him from ever having to engage with other Libyan entities. This enabled Haftar not only to advance militarily but also to reshape the local economy and divide the country administratively. For example, the robbery of the Central Bank of Libya’s Benghazi headquarters by Haftar’s son Saddam, and the impunity he was afforded for it despite ample evidence of his involvement, triggered a liquidity crisis in eastern Libya that resulted in Russia printing a parallel currency.
Over the years, until his failed war on Tripoli and forced unification talks, Haftar’s violent coercion of private Libyan banks to fuel his criminal and military activities created so much debt that Libya’s entire banking system could have collapsed, had it not been for restrictions eventually placed by the Central Bank, which also reinforced the east-west divide created by Haftar.
This debt burden still needs to be resolved. Aside from banking, the cannibalisation of eastern Libya’s economy by Haftar’s Military Investment Authority has created a highly corrupt entity which hampers efforts to reconstruct devastated cities like Benghazi and Derna or engage in infrastructure upgrades. However, in western Libya, Europeans have also indirectly allowed Libya’s mafiaisation, distorting opportunities to create sustainable processes for protecting key interests.
Migration and human trafficking became a key business of the rent-seeking shadow economy following the 2014 civil war. As the crisis came to a head in Europe and Italy, the then Italian Interior Minister Marco Minniti developed a plan that provided Italy greater control over migration flows across the Mediterranean: however, this resulted in formalising and empowering the very groups who trafficked them.
This eventually led to the creation of an entire infrastructure of migration detention centres across Libya, empowering the militias who controlled the centres to impose themselves as formal entities within the Libyan Ministry of the Interior, while remaining independent of any civilian control or oversight.
Moreover, this new Libyan system generated its own miniature economy based on capturing Sub-Saharan Africans or other non-Libyans to boost the amount of money and support these groups would receive from Europe, allowing them to become powerful entities in their own right.
Finally, unofficial policies pursued by European states, and also the role of criminal organisations, have helped the rise of a corrupt class of oligarchs in Libya, which then became a powerful obstacle to change, and also empowered smuggling gangs into becoming a major drain on Libya’s political economy.
The decision by Europe’s RELEX (Working Party of Foreign Relations Counsellors) to issue a highly controversial interpretation of the United Nations Security Council’s sanctions regime on Libya has allowed for a constellation of highly opaque and complex financial mechanisms that enable Libya’s oligarchs and select European partners to pay money out of and profit from what should be frozen assets of the country
Whilst this is largely under the radar, the fight over control of the Libyan Investment Authority – the institution which formally controls most of these assets – across multiple Libyan administrations is a useful indicator of how highly prized and lucrative this has become.
Similarly, the smuggling of fuel from Libya’s refinery in the western town of Zawiya has long been a source of valuable rent to western Libya. Despite extensive documentation of this in United Nations Panel of Experts reports, including on how much of this refined fuel is illicitly smuggled offshore, likely towards offshore storage units near Malta, this business and the gangs who control it continue to thrive while official European policy turns a blind eye.
Tarek Megerisi is a Senior Policy Fellow at the Middle East and North Africa programme of the European Council on Foreign Relations (ECFR), where he works on cohering more strategic, harmonious and incisive policy-making from European countries towards the Maghreb and Mediterranean regions – with a long-term focus on Libya. Megerisi has worked across the spectrum over the last ten years, with various Maghrebi, European, and multilateral authorities on providing reform and stabilisation assistance to transitional states in the region. This has included working on a diverse range of projects from post-conflict stabilisation and rebuilding, Libya’s domestic and international political processes, economic reform in Tunisia, and the eastern Mediterranean disputes. He has also commentated on regional developments for a range of publications including Foreign Policy magazine to the Guardian newspaper and contributed to a variety of think-tank programming across the US, Europe and MENA regions.
Source: “Warlords to State-lords: Armed Groups and Power Trajectories in Libya and Yemen”, edited by Eleonora Ardemagni and Federica Saini Fasanotti.